Wednesday, 15 August, 2018


Bitcoin Slips as News Emerges of Federal Probe Into Price Manipulation

Bitcoin price drop news Why is bitcoin going down? BTC falling today GETTYBitcoin price drop news Why is bitcoin going down? BTC falling today
Conrad Doyle | 26 May, 2018, 02:22

The Justice Department has opened a criminal probe into whether traders are manipulating the price of Bitcoin and other digital currencies, dramatically ratcheting up US scrutiny of red-hot markets that critics say are rife with misconduct, according to four people familiar with the matter.

Representation of the Bitcoin virtual currency standing on the PC motherboard is seen in this illustration picture, February 3, 2018.

The DOJ, along with the Commodity Futures Trading Commission, are investigating whether traders have been making orders without any intention of filling them - a practice known as spoofing - or selling the cryptocurrencies to themselves as ways to manipulate the price of the digital monies.

A Justice Department spokesman declined Bloomberg's request for comment and CFTC officials did not respond to their requests for comment.

Bitcoin prices have fallen by $8,000 in the last year
CoinMarketCapBitcoin prices have fallen by $8,000 in the last year

Some market participants have alleged that crypto manipulation is rampant. According to a report from Bloomberg, the investigation is in its early stages and will focus on both bitcoin and ethereum, as well as various altcoins. Bitcoin raised a lot of eyebrows, when it surged from just under $1,000 to nearly $20,000 a year ago, with many investors calling out the digital currency for its volatility.

The department has ordered for a thorough scrutinization of exchanges and traders, in a bid to find the origin of fraudulent market activities, such as "spoofing", fake market orders, and other types of manipulation. Cameron Winklevoss, co-founder of the cryptocurrency exchange Gemini, said that these regulations are welcomed by the market if they help deter bad actors.

"There's very little monitoring of manipulative trading, spoofing and wash trading". The investigation will search for evidence of spoofing and malicious market activity, that could in turn be directly influencing the state of the markets. Then there's 'pump and dump, ' where an investor spreads misplaced confidence in a security, and then sells their own shares for profit while the security tanks. "With $10- to $15 million you're able to move markets quite substantially", he added.

Research suggests that about 1,000 people hold 40 percent of all bitcoin, giving these individuals the power to effect the market if they choose.

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